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One of the major decisions all spread bettors are faced with is which spread betting broker we decide to use for our spread bets. The problem is that there are many spread betting brokers – most with significant differences when it comes to spread betting.
In this article, we’ll take a comprehensive look at a range of the best spread betting brokers to help you make an informed decision before you begin spread betting.
Below is an overview of the best spread betting brokers in the UK. Additionally, there are in-depth overviews of each spread bet broker below the table.
| Broker | FCA Regulated | No. of UK stocks | Guaranteed Stop Loss | Demo Account |
|---|---|---|---|---|
| IG Index (Best all-round) | Yes | All UK stocks above £10 million market capitalisation | Yes | Yes |
| Spreadex (Best for micro-caps) | Yes | All UK stocks above £1 million market capitalisation | Yes | No |
| City Index (Best backup) | Yes | Most FTSE 350 stocks and some AIM shares | No | Yes |
| CMC Markets | Yes | 636 UK stocks | Yes | Yes |
| Pepperstone | Yes | None | No | No |
| ETX Capital | Yes | Declined to answer | Yes | Yes |
IG Index
Best all-round spread betting broker
IG Index was founded in 1974 by Stuart Wheeler and it listed on the London Stock Exchange as IG Group PLC in July 2000. It is the market leader in the UK and have a global presence.
About IG Index
- Date founded: 1974
- FCA regulation: Yes
- Number of UK stocks: Offers most UK stocks above £10 million market capitalisation
- Available spread bet markets: Stocks and shares, commodities, indices, forex
- Guaranteed stop loss: Yes
- Demo account: Yes
- Spread on FTSE 100: 1 point
- Spread betting fees: Formula for shares overnight funding charge = nights held x (market closing price x trade size x (2.5% +/- LIBOR*)) / 365.
*If you’re long, you pay LIBOR (or the equivalent interbank rate). If you’re short, you receive it - Live chat and phone support: Yes
My thoughts on IG Index
I have given them the title of ‘best all-round spread betting broker’ because I use IG for most of my dealing in spread bets. It is my first choice spread bet provider.
The main advantage of IG Index here is instant dealing on almost all UK stocks on its trading platform. When we click to place a spread bet, we are instantly filled or told the trade is rejected. We are not waiting around for the broker to decide if they will place the trade for us.
This is a big advantage because in a fast-moving market we want to know if we’ve been filled or not. If not, then we can try and be filled elsewhere.
Another important distinction of IG Index is that the company does not make money on client losses, unlike many other spread betting firms. This is explicitly stated on the company’s website.
IG Index also offers a reliable telephone service and so often we can deal inside the spread if we call up a dealer.
Another benefit of having a spread betting account with IG is that there is a wide variety of financial markets that can be traded, such as stocks, currency pairs (such as the popular EUR/USD), and commodities. However, some of these complex instruments can be high risk and so one must tread with caution.
Like many spread bet brokers there is a minimum deposit. IG also offers trading tools and is a CFD broker too. Unlike spread betting, CFDs are liable for capital gains tax. However, CFD trading avoids stamp duty. To learn how CFDs work, you can visit this article here.
In my opinion, IG has the best spread betting platform, tight spreads, as well as the best trading platform for CFDs.
IG also has a mobile app which can be used to receive alerts on price movements and market moves. You can continue reading about IG Index in my full IG review.
Spreadex
Best spread betting broker for micro-caps
Spreadex is a spread betting broker founded in 1999 by Jonathan Hufford. They offer online sports betting service and purchased IG Group’s sports betting arm in 2011.
About Spreadex
- Date founded: 1999
- FCA regulation: Yes
- Number of UK stocks: Almost all UK stocks
- Available spread bet markets: Stocks & shares, commodities, indices, forex, cryptocurrency
- Guaranteed stop loss: Yes
- Demo account: No
- Spread on FTSE 100: 1 point
- Spread betting fees: The funding charge is based on the one-month London Interbank Offer Rate (LIBOR) + a Spreadex Charge per annum. For FTSE 350 stocks the charge is 3%. Therefore if LIBOR was 0.5%, the total daily funding charge to a long position would be (0.5% + 3%) / 365 = 0.0096% of the total position value.
If you are short, the 3% charge is subtracted from the LIBOR rate. Unlike long positions, the total funding adjustment on short positions can result in either a positive or negative funding adjustment, so your account can be credited or debited funding. - Live chat and phone support: Yes
My thoughts on Spreadex
I have given Spreadex the title of best spread betting broker for micro-caps as the broker offers spreads on smaller stocks and micro-caps that IG Index do not offer. Spreadex is my secondary spread bet broker after IG Index.
Spreadex will make a market on almost all UK stocks above £1m million market cap. This means they offer more stocks to spread bet in the UK than IG.
The main advantage of Spreadex is its versatility. Spreadex offers the most UK stocks to spread bet out of all spread bet brokers and so we can always be certain that a stock we want to trade on a spread bet will be offered.
Despite this advantage, we should generally avoid or at least tread with caution with spread betting micro-caps because of the illiquidity.
This is because if we want to sell our spread bets in a hurry then we may not be able to do so quickly. Unfortunately, one of my friends found this out the hard way as he lost several million pounds back in 2007 and 2008. In 2018, retail investor accounts were protected from negative equity. This means we can trade a range of markets tax-free and not lose more than our deposit.
Spread betting in micro-caps can be great when you are right but leverage works both ways. Always ensure you are not overly aggressive on the position sizing and always check the liquidity of the stock before placing a spread bet.
One disadvantage here of Spreadex is that execution is not instant. Although Spreadex has tight spreads, when dealing online on Spreadex’s trading platform we are given a spinning loading wheel that can take a few seconds to let us know if the spread bet trade has been executed or rejected.
However, the final advantage of having a spread betting account with Spreadex offers excellent phone service and if you call them up you will be able to trade and deal quickly and effectively.
Spreadex can also be used to trade CFDs.
City Index
Best backup spread betting broker
City Index is a spread betting broker founded in 1983 by Chris Hales and Jonathan Sparke. In 2014 they were acquired by GAIN Capital, a US-based firm listed on the New York Stock Exchange (NYSE) that operates in over 140 countries worldwide.
About City Index
- Date founded: 1983
- FCA regulation: Yes
- Number of UK stocks: FTSE 350 and some AIM stocks
- Available spread bet markets: Stocks & shares, commodities, indices, forex, cryptocurrency
- Guaranteed stop loss: No
- Demo account: Yes
- Spread on FTSE 100: 1 point
- Spread betting fees: LIBOR +/-2.5% for long and short positions
- Live chat and phone support: Yes
My thoughts on City Index
I have given City Index the title of best backup spread bet broker. I have a City Index account because when I tried to short Burford Capital in 2019 before Muddy Waters revealed its short position, I could not find a broker that would execute the trade for now.
City Index offered the trade on a spread bet to its clients and so this is why I have an account. City Index often offer stocks available for spread bet trading that other spread bet brokers may not because they have hit their risk tolerance.
City Index is one of the more relatively unknown spread betting companies and so this is why they are able to offer stocks to trade when other firms cannot.
City Index can also be used to trade CFDs but again these can be high risk. Risk management should be used alongside a rigorous trading strategy when trading CFDs. I use technical analysis in order to trade.
CMC Markets
CMC Markets is a spread betting broker founded in 1989 by Peter Cruddas. The company was one of the first companies to offer online trading over the internet. CMC Markets are listed on the London Stock Exchange as CMC Markets PLC.
About CMC Markets
- Date founded: 1989
- FCA regulation: Yes
- Number of UK stocks: FTSE 350 and some AIM stocks
- Available spread bet markets: Stocks & shares, commodities, indices, forex, cryptocurrency
- Guaranteed stop loss: Yes
- Demo account: Yes
- Spread on FTSE 100: 1 point
- Spread betting fees: One month LIBOR plus 0.0082% on buy positions and minus 0.0082% on sell positions
- Live chat and phone support: Yes
My thoughts on CMC Markets
CMC Markets meets all the relevant criteria for a spread bet broker. It offers a variety of markets, guaranteed stop losses, and also has a demo account.
The spread on the FTSE 100 is also small and so spreads across the board are likely to be fair. CMC Markets also has live chat and phone support.
I personally don’t use this broker as I already have three spread bet brokers and CMC Markets does not offer a wide range of UK stocks. However, for trading other markets I would have no problem trading with the company.
Pepperstone
Pepperstone was founded in 2010 by Owen Kerr and Joe Davenport. The company was founded in Melbourne in Australia and offers spread betting services across several countries.
About Pepperstone
- Date founded: 2010
- FCA regulation: Yes
- Number of UK stocks: FTSE 350 and some AIM stocks
- Available spread bet markets: Stocks & shares, commodities, indices, forex, cryptocurrency
- Guaranteed stop loss: Yes
- Demo account: Yes
- Spread on FTSE 100: 1 point
- Spread betting fees: One month LIBOR plus 0.0082% on buy positions and minus 0.0082% on sell positions
- Live chat and phone support: Yes
My thoughts on Pepperstone
Pepperstone meets the criteria for a good spread betting broker. Unfortunately, they do not offer any UK stocks or even any stocks and so I would never use this broker specifically for this reason.
ETX Capital
ETX Capital was founded as Monecor Ltd in 1965 and in 2010 began expanding into Europe. ETX is an acronym for electronic trading, telephone trading, and the x is for execution services.
About ETX Capital
- Date founded: 1965
- FCA regulation: Yes
- Number of UK stocks: Unknown
- Available spread bet markets: Stocks & shares, commodities, indices, forex, cryptocurrency
- Guaranteed stop loss: No
- Demo account: Yes
- Spread on FTSE 100: 1 point
- Spread betting fees: Positions held overnight (at 10pm UK time) will be subject to ‘swap’ charges. These are the interbank market ‘tom-next’ rates plus our standard fee of 1.35% per annum. Positions held overnight on a Wednesday will be subject to three days of swap charges.
- Live chat and phone support: Yes
My thoughts on ETX Capital
ETX Capital has been around for a long time since 1965 and meets all the requirements for a good spread betting broker. The broker offers UK stocks to spread bet however it does not say on its website how many this is or give an indication of any markets.
In order to find out, one would need to sign up, as I contacted the company and the person on the live chat could not tell me how many.
However, I would consider trying ETX Capital if I did not already use several spread bet brokers such as IG Index and Spreadex.
ETX Capital can also be used to trade CFDs.
Spread betting brokers buyer’s guide
To compile a list of best spread betting brokers I look at what was important. Having a broker that is authorised by the Financial Conduct Authority (FCA) is necessary as it means you are less likely to be scammed. Trusting our money with a legitimate spread bet broker clearly matters.
Alongside this, I picked several key criteria which we will now go into more detail about.
Company history and founding date
Company history and founding date are important because we want to choose a spread bet broker that has been around for a while.
A broker that is new in the last two years may have teething problems or it may not be genuine. If a company has been around for 20 years, we can be relatively sure it is not going to disappear with our money. This is also relevant for CFD providers too. We want the company to have a history of trading experience.
Broker FCA regulation
The Financial Conduct Authority (FCA) is an independent financial regulatory body in the United Kingdom. The FCA regulates over 58,000 UK financial service firms, including banks, insurance providers, and spread bet, CFD, and stockbrokers.
This is important because when we use a broker that is regulated by the FCA then we can expect to be protected from various frauds and criminal financial activity.
Number of UK stocks
The number of UK stocks is important because we want to have a wide variety available to us for trading. Global markets are nice but if a spread bet broker is only offering a limited amount of UK stocks then we are limited in our capacity to deal.
Available spread bet markets
Having a variety of markets to trade matters because having the ability to trade indices and commodities gives us the ability to hedge our trading accounts and investing portfolios.
For example, if we have a portfolio including several oil-producing shares but we believe the price of oil is going to fall, we can then take a short position on oil.
This would mean our oil stocks may fall because the underlying asset the companies produce is down, but we would make a profit on our oil short.
Guaranteed stop loss
We can also use the indices to act as a hedge. Rather than selling all of our individual stocks if we believe the market is going to fall, we can simply short an index where our shares are listed.
Demo account
Demo accounts are not necessary for experienced traders. But spread betting beginners should always pick a broker with a demo account.
Interacting with the demo lets one get used to the platform without risking real money. It also allows one to try out and backtest trading and spread betting strategies.
Spread on FTSE 100
The FTSE 100 is the index for the largest 100 stocks in terms of market capitalisation for the UK. It is useful to know what the spread bet broker charges on the spread for this index.
The spread is the difference between the buy and sell prices. For example, if we take a long position on the FTSE 100 and the spread is 1 point, then we would only need to make 1 point on the trade before we have covered the spread.
However, if the spread was 2 points then we would need to make double the amount in order to cover the spread.
Most competitive spread bet brokers offer spreads of 1 point or less on the FTSE 100. If a spread bet broker is offering larger spreads than 1 point then it may be that the spreads offered by that company are not very competitive.
Spread betting fees
Spread betting fees are the fees we pay for overnight positions. Spread betting is a leveraged product and therefore we trade on margin. We pay interest on the full position and so the fees that we pay can affect our profits.
Spread betting fees are not so important for short term trades as these will be minimal, however, it is worth checking to make sure these are relatively in-line with other spread bet brokers.
For long term spread bettors then fees grow increasingly in importance the longer the positions are open.
Live chat and phone support
Live chat and phone support is a must for any spread bet broker.
If something goes wrong, or you need to understand something quickly because you have positions open, you need to be able to rely on the spread bet broker to resolve this quickly.
If the spread bet broker does not offer live chat and phone support then perhaps it may be best to avoid them.
Conclusion
We have been through six spread bet brokers that are available in the UK. All of these meet most of the criteria for being a good spread betting broker.
My favourite broker and the broker I gave the title of best all-around spread betting broker is IG Index. This is because it is the market leader and has instant execution, coupled with the company’s explicit policy of not profiting from client losses.
IG Index has a large range of stocks and covers almost all UK stocks aside from micro-caps. These are not typically stocks to be traded on with leverage due to the high spreads and illiquidity. I am happy with the client service at IG Index and so as long as the broker continues to meet my needs it will remain my default spread bet broker.
The second broker that I use is Spreadex. This is my secondary broker that is my go-to if for some reason IG can’t make a market on a stock. This can sometimes occur if a spread bet broker hits their internal risk limits.
For example, if all of its clients are positioned one way on a stock, they may stop offering any more positions to be taken in that stock to its clients.
This is why I have several funded spread bet accounts so that I can instantly trade with another spread bet broker if for some reason I can’t trade.
The third and final spread betting broker that I use is City Index. This is not a popular spread bet provider or well-known in the UK which means that City Index is less likely to have a large number of clients positioned the same way in a single stock because it is relatively less used in comparison to IG and Spreadex.
This is an advantage of using the lesser-known names – sometimes you can get filled in stocks where the main providers won’t offer the trade.
There are many other spread bet brokers out there other than six, but please do remember to check that the broker is FCA regulated as well as the other criteria. Doing so could save you a lot of money.
Financial spread betting is free from capital gains tax but forex trading is hard and most traders lose when trading these financial instruments.
Be careful of forex brokers that offer trading accounts. In forex spread betting, many of these forex brokers take the other side of the trade to their client – meaning that the forex broker has a vested interest in the client losing money.
If you’re new to spread betting, my article on how to spread bet will teach you all the basic ins-and-outs for you to get started.
Alternatively, if you wish to start trading the UK stock market then my UK Online Stock Trading Course can help. This is not investment advice but covers technical analysis and a trading strategy that I use in the UK.
